Securities Law Prof Blog

Editor: Eric C. Chaffee
Univ. of Toledo College of Law

Wednesday, June 8, 2011

Two Ad Execs Settle Charges of Soliciting Pledges to Purchase Beer Company

The SEC announced a settlement with two advertising executives who launched a campaign to buy a beer company through a solicitation of investors on Facebook and Twitter without first registering with securities regulators and making the necessary disclosures.  Michael Migliozzi II and Brian William Flatow consented to a cease and desist order to settle charges that they directed investors to their website,, and solicited pledges for a hoped-for $300 million purchase of the Pabst Brewing Company.

The SEC's order found that Migliozzi and Flatow intended to solicit funds in two stages. In the first stage, the two sought pledges and required that pledgors only supply an e-mail address, first name, last name, and pledge amount. If they received $300 million in pledges, the second stage would consist of collecting the pledges and undertaking to purchase Pabst.  In addition, Migliozzi and Flatow created a Facebook page and Twitter account in order to advertise their offering. Would-be investors visiting the website were told that each investor would receive a certificate of ownership as well as beer of a value equal to the amount invested.  In the end, the two never received the $300 million in pledges, and never collected any money.

The SEC's order finds that Migliozzi and Flatow violated Section 5(c) of the Securities Act of 1933.

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